08
Jan

Lower oil prices and solid, albeit slower, economic growth will extend and actually grow global airline profits in 2019

The International Air Transport Association (IATA) forecasts the global airline industry net profit to be USD35.5 billion in 2019, slightly ahead of the USD32.3 billion expected net profit in 2018, which has been revised down from the USD33.8 billion figure predicted in Jun-2018. Passenger numbers are expected to reach 4.59 billion (up from 4.34 billion in 2018) and cargo tonnes carried are expected to reach 65.9 million (up from 63.7 million in 2018), it predicts.

IATA says lower oil prices and solid, albeit slower, economic growth (+3.1%) will extend the run of profits for the global airline industry, after profitability was squeezed by rising costs this year. It is expected that 2019 will be the tenth year of profit and the fifth consecutive year where airlines deliver a return on capital that exceeds the industry’s cost of capital, creating value for its investors.

The return on invested capital is expected to be 8.6%, predicts IATA, unchanged from 2018, and the margin on net post-tax profits is expected be 4.0%, up marginally from 3.9% in 2018. Overall industry revenues are expected to reach USD885 billion, a +7.7% rise on the USD821 billion level predicted for 2018, while average net profit per departing passenger will increase to USD7.75 from USD7.45 in 2018. But, IATA acknowledges demand growth will slow for both passenger traffic (+6.0% in 2019, +6.5% in 2018) and cargo (+3.7% in 2019, +4.1% in 2018).

READ MORE via The Blue Swan DailyLower oil prices and solid, albeit slower, economic growth will extend and actually grow global airline profits in 2019